Amid daily news of an ever-crumbling US auto industry, there’s been much talk of the bailout the automaker CEOs tried to negotiate in Washington DC the other day, among so many bailouts that it’s beginning to get increasingly harder to believe in the Federal Reserve’s ability to carry the weight. President-elect Barack Obama acted pretty swiftly on the matter, too, on the first possible occasion – during his wife’s and his guided tour of The White House the other week.
If action isn’t taken, and taken fast, the entire industry is in peril, potentially hurling millions of Americans – and the industry’s employees overseas – into unemployment, if the ripple effects are included in the equation (as they should). The global consequences are likely to exceed the effect of the ongoing credit crunch, not only beacuse it affects America itself, but as a result of how the global auto industry is intertwined, by ownership, alliances and partnerships — the symbol effect not withstanding.
Of course, the current or the soon-to-be U.S. administration isn’t likely to let that happen, but, bearing the overall American economy in mind, for how long will The Fed be able to bail out global corporation upon corporation, seeing as the country itself is, in effect, technically bankrupt?
Film-maker Michael Moore introduced an idea the other day, reiterated in yesterday’s Larry King show on CNN, which implies taking drastic measures, Franklin D. Roosevelt-style, advocating a principle whereby the government bails out the auto industry, provided that its managements are replaced and that they replace huge American cars with smaller, less fuel-demanding vehicles, focusing on hybrids, as well as cars running on alternative fuel. Given the declining US household economy, the cars should be affordable, too, of course.
There’s a lot to be said about Michael Moore and his conduct, but this just could be it. Cheaper cars are in demand – stateside and on a global basis. If GM, Ford and Chrysler are to survive, you just can’t tell them to delve into the food and beverages market. Sustainable car-making, on the other hand, sounds like a plan.
I would like to pour some ice on your expectations, though: The American administration simply cannot go on bailing out one business after the other.
They’re in dire need of one themselves.